What You Need to Know
- The ACLI told the federation that some applicants may face pandemic-related decision delays.
- The federation contends that delays could lead to rejection.
- Connecticut's commissioner acted on the issue in April.
The Consumer Federation of America says life insurers should voluntarily disclose the changes they are making in life insurance underwriting procedures and standards as a result of the COVID-19 pandemic.
The Washington-based federation says life insurers ought to at least answer basic questions, such as whether they will require applicants to use COVID-19 vaccines, what kinds of tests and test results they’ll require and whether and how standards might vary by applicant age.
If life insurers don’t begin posting underwriting guidelines voluntarily, then state insurance regulators should work through the National Association of Insurance Commissioners (NAIC) to standardize COVID-19 underwriting disclosures, according to the federation.
The federation made that argument in response to a letter from Susan Neely, president of the American Council of Life Insurers, who told the federation that life insurance remains widely available, that U.S. life insurers are paying out an average of $215 million in life insurance benefits every day, and that many of the long-term implications of COVID-19 still are unknown.
“As experience evolves and more information becomes available,” underwriting will evolve as well, Neely wrote to the federation.
“While today’s circumstances may delay a coverage decision for some people in some situations, a delay in the application process is not a rejection,” Neely wrote. “Insurers are legally required to make underwriting decisions based on sound actuarial principles to protect all policyholders… Arbitrary decisions are prohibited.”
The Federation’s Take
Federation officials have emphasized in their response that Neely acknowledged that some underwriting decisions might be delayed.
“This admission is stark evidence that we need disclosure from life insurers to let us know who the ‘some people’ are who face delay and what ‘circumstances’ lead to such delay?” J. Robert Hunter, the federation’s director of insurance, said in a comment about Neely’s letter.